Hi all. Just getting started out looking for flip properties. I've been researching alot looking for ways to get started with little cash. I have about $50k available to me. It seems the trustee auctions at the courthouse is a good place to get a potentially good deal. Problem is, they require full cash payment on the spot so this seems to rule out hard money loans. Does anyone know if hard money lenders are open to working out loans contingent on a winning bid? Or, if was able to win one with the cash I have available will hard money lenders work out a loan for the rehab costs?
Hi @Jason Baehr ,
You're right, there can be some great deals at the courthouse and the hardest part is paying full cash at time of winning bid. Since all the parties know this, they typically have entire teams of people inspecting the property, running numbers, researching properties before the auction starts, etc. So these type of properties can be home runs but are also hugely risky.
For this reason, most lenders will not lend on this type of transaction because they require Title Insurance on their deals. This leaves you with two options, pay full cash and then refi out the next day, or, raise money from private investors like yourself, pool the money together, make sure to do your due diligence and buy properties in full at the courthouse steps.
Also, there are auctions that do not require full payment at time of winning big. These typical auctions are held much like a normal transaction with Title and Escrow. Hard money lenders shouldn't have any problem lending on these type of sales.
Best of luck!
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